Abstract: With the flexibility of delivery capacity and price discount taken into account,retailerled decentralized decision making,supplierled decentralized decision making,and integrated inventorytransportation optimization modes are considered.Optimization model for these modes are presented.Based on these models,performance is evaluated for different modes.It shows that,the retailerled decentralized decision making is better than the integrated inventorytransportation optimization in the sense of inventory cost,and the integrated inventorytransportation optimization is better than retailerled decentralized decision making in the sense of transportation cost.However,the integrated inventorytransportation optimization is better than retailerled decentralized decision making in the sense of total cost.

Key words: flexibility of delivery capacity, price discount, decentralized decision making, integrated inventory transportation optimization